Proposed regulations on basis reporting of debt instruments and options are issued

December 2011


On November 22, 2011 the Department of Treasury ("Treasury") and the Internal Revenue Service ("IRS") issued proposed regulations titled "Basis Reporting by Securities Brokers and Basis Determination for Debt Instruments and Options" which affect the information reporting by brokers for certain transactions relating to debt instruments and options.

Highlights of the proposed regulations, which affect transactions as early as January 1, 2013, include guidance on: 

  • The reporting of gross proceeds from a sale or closing transaction with respect to certain options;
  • The computation and reporting of adjusted cost basis reported on either the sale of certain debt instruments or certain options;
  • The information required to be reported on transfers of a debt instrument or an option to another broker; and
  • Reporting for organizational actions that affect the basis of a debt instrument or option.

A public hearing has been scheduled for March 16, 2012. The IRS has requested that comments be submitted by February 24, 2012.

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